PM called talks to derail renewable energy

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The Federal Government and fossil-fuel industry executives discussed ways to stifle growing investment in renewable energy projects at a secret meeting earlier this year.

Prime Minister John Howard called the meeting on May 6, five weeks before releasing the energy white paper on June 14.

The white paper favours massive investment in research to make fossil fuels cleaner, at the expense of schemes boosting growth in renewable energy.

Mr Howard called together the fossil-fuel-based Lower Emissions Technology Advisory Group to seek advice on ways to avoid extending the mandatory renewable energy targets scheme.

The Government has touted the scheme as a key plank in achieving its Kyoto Protocol target to hold greenhouse emissions at 108 per cent of 1990 levels.

The Government continues to refuse to ratify the protocol, despite Russia's decision last week to ratify and bring the protocol into legal effect.

Russia's move further isolates the United States and Australia.

Most countries, including big emitters India and China, support the protocol.

The mandatory renewables target is the only legally enforceable measure among Australia's otherwise voluntary policies to encourage lower emissions.

But according to minutes taken by Rio Tinto's acting chairman, Sam Walsh, the Industry and Resources Minister, Ian Macfarlane, told the May 6 meeting the scheme had worked too well.

The scheme requires power companies and large consumers to source an extra 9500 gigawatt hours of electricity from renewable sources by 2010.

Mr Macfarlane said "investment in renewables was running ahead of the original planning", and was generating renewable energy certificates ahead of original projections.

The Government-commissioned Tambling review, tabled last January, warned that unless the scheme was extended beyond 2010, investment in renewable energy generation would stall after 2007 and Australia would be locked out of technical advances that would reduce costs.

The review panel recommended doubling the target to 20,000 megawatt hours by 2020.

It said the economic cost would be 0.08 per cent of GDP, but consumers were willing to pay more for clean power.

But Mr Howard told the May 6 meeting that a $1.5 billion low-emission energy fund was more attractive, as extending the renewables scheme would cost industry $1.7 billion.

The industry representatives agreed with the Government's idea, which was similar to a fund set up by the United States Department of Energy.

The Prime Minister said the mandatory target had been a burden on industry, but "it was not credible to ignore" the Tambling review.

He said there was a real need to propose credible alternatives that would pass "the pub test".

Mr Macfarlane supported a levy on all consumers over 10 to 15 years to create the new $1.5 billion technology fund.

The white paper released five weeks later, however, proposed that the Government provide $500 million, with the rest from industry on a two-for-one dollar basis.

The minister closed the meeting stressing the need for "absolute" confidentiality to avoid a "huge outcry" from the renewable energy industry.

A spokeswoman for Mr Macfarlane told The Sunday Age that extending the mandatory target scheme was too economically costly. "It comes down to jobs and economic growth, and both would have suffered," she said.

The spokeswoman said the scheme "put the cart before the horse" in encouraging investment, when the renewables industry wanted help to overcome basic technical and storage problems first. She said the white paper granted $134 million for research to this end.

But the Sustainable Energy Industry Association said the Commonwealth was mistaken.

It said these "so-called" problems had largely been dealt with.

The biggest constraint now was market size, which could have been addressed by increasing and expanding the mandatory target scheme, the association said.

The Labor Party is committed to ratifying the Kyoto Protocol and increasing the mandatory target to 5 per cent of electricity supply.

The 9500 kilowatt-hours target now amounts to less than 1 per cent of projected electricity generation in 2010.